"These elements can be optimized depending on factors like geographic location, language, the content of the website, the time of day or the past performance of different ads," Google's vice president of product management Neal Mohan and engineering director Joerg Heilig wrote in a blog posting announcing the deal.

"This technology can help advertisers get better results from their display ad campaigns. In turn, this enables publishers to make more money from their ad space and delivers web users better ads and more ad-funded web content," they said.

Teracent's technology will be available to Google's display advertising clients, they added.

The transaction is expected to close this quarter, Google said, without disclosing the financial terms.

On Nov. 9, Google also announced that it will buy AdMob, a provider of display ad technology for mobile phones, for 750 million U.S. dollars.

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In addition to automatic captions, Google said it is adding another feature called "auto-timing," which enables YouTube users to create a simple text file with all the words in a video, leaving Google technology to figure out when the words are spoken and create corresponding captions.

Both features will be available in English by the end of this week with automatic captions initially visible only on a handful of YouTube's partner channel, Google said.

"We hope to expand these features for other channels and languages in the future," Ken Harrenstien, a deaf Google software engineer, wrote in a posting on the company's blog.

Captions in videos not only help the deaf and hearing impaired, but can also improve search and even enable users to jump to the exact parts of the videos they're looking for, Harrenstien noted.

He said Google will work with manufacturers to bring Chrome OS netbooks to the market before next year's holiday season.

According to Google, the netbooks or mini-laptop computers will have specified hardware components such as solid-state hard drives to create the fastest experience for the new operating system.

The company also announced that it is open-sourcing the code of Chrome OS from Thursday, saying "the code is free, accessible to anyone and open for contributions."

Google has touted speed, simplicity and security as the key aspects of the new software, which is seen as a move by the company to challenge Microsoft Corp.'s dominance in the operating system market.

In Thursday's demonstrations, Google engineers showed how the Chrome OS can start up a computer in seconds and perform various tasks in the web browser.

The Chrome OS represents a "fundamentally different model of computing," Google's group product manager Caesar Sengupta and engineering director Matt Papakipos wrote Thursday in a posting on the company's blog.

"All apps are web apps. The entire experience takes place within the browser and there are no conventional desktop applications. This means users do not have to deal with installing, managing and updating programs," they said.